The SMSF Association has expressed its opposition to proposals with regard to SMSFs paying for the Compensation Scheme of Last Resort (CSLR) put forward by Minister for Financial Services Daniel Mulino in a discussion paper on options to support the measure’s ongoing sustainability.
“We don’t agree with either. [SMSFs] shouldn’t be kept out [of the CSLR] totally. If they meet the criteria to make a claim, they should be able to make a claim, and they shouldn’t be excluded just because they’re a self-managed super fund member that hasn’t paid a levy,” SMSF Association chief executive Peter Burgess told selfmanagedsuper.
“We don’t think that’s fair. No other investors in any other structures are being required to make that decision. We don’t think it’s fair that self-managed super fund members should make that decision either.”
Burgess pointed out no member of a superannuation scheme should be disadvantaged just because they decide to manage their own super fund.
Further, he indicated in the event of either an opt-in or opt-out scheme, it was unlikely a significant number of SMSFs would choose to be part of the scheme, which could mean the associated levy imposed on them would be significant.
“If there is an overflow levy that’s required, then there’s only a small number of participating self-managed super funds, and so the levy is likely to be substantial and you’re going to end up paying a disproportionate share of the cost. That to us is not a viable approach and we think would be a complicated system to manage and it would be an awkward system to manage,” he said.
According to Burgess, the measure would also create an interesting quandary for an SMSF trustee seeking advice from their financial planner as to whether or not to join such a scheme.
“That would be an interesting conversation, I imagine, to have with your adviser as to whether they should participate in the scheme to protect them against the advice that the adviser’s providing them [if that] proves to be inappropriate. That’s just a bizarre situation to be in,” he noted.
